State To End Part B Premium Payments for Some Beneficiaries

Monthly budgets for thousands of low-income elderly Californians will get tighter next month when the state stops paying Part B premiums for some Medicare beneficiaries who are also eligible for Medi-Cal.

Approved as part of the state’s efforts to balance the budget, the cutback will affect somewhere between 57,000 and 74,000 people. Medi-Cal, the state’s Medicaid program, is projected to save almost $58 million this fiscal year because of the cut. Savings were originally projected at $63 million but because of bureaucratic and computer delays, the cutbacks originally scheduled to take effect Nov. 1 are now scheduled to kick in Dec. 1.

Last month, the state sent notices to about 74,000 people who could be affected. State officials estimate the actual number will be closer to 57,000.

Under the new policy, which applies to people in Medi-Cal’s share of cost program, the $96.40 monthly premium for Medicare Part B will be deducted from Social Security checks of beneficiaries in those months in which the individual’s medical expenses don’t exceed his or her share of cost. Participants in the share of cost program, which includes individuals with incomes above $1,100 per month and couples with incomes above $1,434 per month, fall under the new policy if they have a monthly share of cost of $501 or more.

Beneficiaries in the share of cost program have too much monthly income to qualify for full Medi-Cal coverage. In a process known as “paying down” toward eligibility for Medi-Cal, these beneficiaries must show they’ve contributed their share of medical costs during the month before the state will pay their Part B premium.

Medicare Part B is intended to fill gaps in medical insurance not covered under Part A, including specific lab tests, home care, medical equipment and other medical services.

‘Difficult Decision’

Norman Williams, a spokesperson for the state Department of Health Care Services, said that state officials realize the cuts will be a hardship for some but that it was a question of trying to maximize the state’s savings while limiting the scope of beneficiaries affected.

“This is an optional benefit under the Medi-Cal guidelines,” Williams said. “States are not mandated by the federal government to pay Part B premiums so we get no matching funds for this program. It comes straight out of the general fund.”

California is one of only two states to cover Part B premiums, Williams said. Michigan is the other.

The change was included in AB 1183, the health budget trailer bill passed by the legislature this fall and signed by Gov. Arnold Schwarzenegger (R).

“The bottom line is this was a difficult decision and it will have an impact on people,” Williams said. “What we try to do is target these kinds of decisions so they affect the fewest number of people while still looking for savings.”

“This made fiscal sense and affected the fewest number of people in the program,” Williams said.Â

People ‘Surprised, Not Happy’

Ken Palinkas — program manager for HICAP, the Health Insurance Counseling and Advocacy Program — said people were surprised, confused and “not very happy,” when they received notification last month.

“This all happened so fast, and a lot of people had no warning. It took many off guard,” Palinkas said. “They’re asking us questions we don’t have answers for yet. Protocols haven’t been established yet so we’re doing a lot of scrambling.”

Palinkas, who oversees HICAP counseling in six Northern California counties, said people are confused by the threshold in the share of cost designation.

“It’s all a pretty complex system of qualifying and then keeping track of medical expenses during the month,” Palinkas said. “It can be pretty hard to follow.”

Here’s the notification sent out by DHCS:

“Elimination of Medicare Part B

Premium Payments Paid by Medi-Cal

You are getting this information because you have Medicare and Medi-Cal with a share of cost. A “share of cost” is the amount you must pay for health care costs each month before Medi-Cal will begin to cover the cost of your health care.

Due to a change in the California Budget, the California Department of Health Care Services will stop paying your Medicare Part B premiums starting in November if your Medi-Cal share of cost is $501 or more. The federal Social Security Administration will deduct your Medicare Part B premiums from your Social Security check beginning with the check you receive in November if you have a share of cost of $501 or more. The monthly Medicare Part B premium is $96.40.

We will send you more detailed information about this change within a month. If you have any questions, call 1-800-952-5294.”

Seniors qualify by meeting monthly income requirements and other criteria.

More Cuts Looming

This cut was part of a protracted effort to bridge a $15.2 billion gap in the state’s budget this year. But that was before the nation’s economy went into a tailspin last month, causing California’s revenues to fall.

Calling the state’s new budget crisis a “state of emergency,” Gov. Schwarzenegger told lawmakers to prepare for new budget adjustments.

Already estimated at about $3 billion, the state’s deficit could top $8 billion this fiscal year, Schwarzenegger said. The Republican governor has called for a sales tax increase to help raise new revenues and he proposed several new service cutbacks, including some for health care.

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State To End Part B Premium Payments for Some Beneficiaries

by George LauerNovember 10, 2008

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